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Why Facebook's Deal With HBO Is Good for Both Companies

A little help from The Rock could push both companies to new heights.

Facebook (NASDAQ:FB) has danced at the edges of being an entertainment platform.

The social network has started directly hosting print content from publishers, and it has always been a place where people share wacky videos. That said, while Facebook has been a website where people can leverage their networks to create viral hits, it hasn't been a place people go to seek out long-form content.

That may change, as the social giant has made a deal that could change the nature of its business. It's a subtle shift, but if this move works, the company could become a go-to location for people looking to watch program-length video.

What has Facebook done?Facebook has made a deal with Time Warner's (NYSE:TWX) HBO to show the premiere episodes of its new series Ballers and The Brink for free on the social network. The debut of Ballers was even hosted by star/executive producer Dwayne "The Rock" Johnson directly from his Facebook page.

Johnson has over 49 million Facebook followers, so to have him not just promoting but also showing a full episode of his show on the service exposes it to a huge new audience. It's also worth noting that HBO told Variety the show won't be available on YouTube or any other third-party digital platform.

How does this help each company?The benefits for Facebook are significant, as the company now has one of the biggest stars in the world, Johnson, active on its platform engaging with his audience. That not only brings eyeballs to the social network, but also strengthens engagement. Showing the episode in this way turns it into an event with Facebook as the location and The Rock as the host.

Showing Ballers, and to a lesser-extent The Brink, also establishes the platform as a place to seek out content beyond videos of cats and babies doing adorable things (though a cat and a baby together would be an event). Doing something like this could be the beginning of Facebook as a full-fledged video platform.

For HBO, the gain is simply putting its show in front of more eyeballs. Now that the pay service is available as a standalone over-the-top service, its potential customer base has gotten younger. No longer is the channel and add-on on top of an already expensive cable subscription. It's potentially an on-its-own purchase.

One way to get people to pull out their credit cards is to hook them on a new series. If a Rock-hosted free premiere gets people invested in the show, they may become subscribers, at least for the length of the series. And once HBO has them on board, it has a chance to keep them with its vast array of original programming and its big movie library.

Not many losers hereThe only potential loser in this deal is Google'sYouTube, which could ultimately suffer from being a video-only platform that's never done a good job becoming a social destination for the masses. But for HBO and Facebook, the benefits are clear: both companies get to use their considerable assets to help the other. Since they're not competitors, both sides can work to advance the goals of its partner while in turn helping itself.

It's "The People's Champion" laying the smackdown on other social networks, rival video services, and even the competing pay cable services. It's hard to see how that won't be good for HBO and Facebook.

Daniel Kline owns shares of Facebook. The Motley Fool recommends Facebook, Google (A shares), and Google (C shares). The Motley Fool owns shares of Facebook, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Author

Daniel B. Kline is an accomplished writer and editor who has worked for Microsoft on its Finance app and The Boston Globe, where he wrote for the paper and ran the Boston.com business desk. His latest book, "Worst Ideas Ever," (Skyhorse) can be purchased at bookstores everywhere.
Follow @tworstideas